It will be bitter, abrasive, and things could get ugly. But the biggest battle in the TV world next week will not be an ultimate fighting match on cable or a political shout-fest on a 24-hour news network.

The antagonists are the TV industry itself: Canada's big television networks will be squaring off against its largest cable and satellite carriers. Although the setting is sedate - a hearing room in Gatineau, Que. - the bout is likely to exhibit the same sense of discord. At stake is a proposal before the federal broadcast regulator that is potentially worth hundreds of millions of dollars.

More Related to this Story

It is not the first time CTV, Global and CBC have clashed with the likes of Bell TV , Rogers Communications Inc. and Shaw Communications Inc. over the broadcasters' proposal to charge the cable operators fees for their signals. But this will be their most divisive standoff yet.

In advance of the CRTC hearings, both sides have poured millions of dollars into lobbying campaigns and advertisements aimed at discrediting the other.

The big broadcasters argue the cable giants make huge profits from subscribers without sharing the wealth with the networks that provide their signals. The cable and satellite companies dismiss the networks' campaign as a cash grab, pointing out that they pipe those channels into 90 per cent of homes in Canada, and the broadcasters reap the advertising revenues.

Caught in the middle are viewers, bombarded with attack ads appealing to hometowns and pocketbooks. The broadcasters say they need a fee to stabilize the shaky financial status of small-market stations. Accordingly, their campaign is branded "Save Local TV." The cable industry's push is branded "Stop the TV Tax," seizing upon consumer fears about bigger bills. Both sides urge consumers to contact their MPs.

The contentious proposal has been debated and dismissed twice by the CRTC. But the idea has been rejuvenated because the networks' financial fortunes have eroded in the past year.

The industry now appears irrevocably polarized. One executive said relations between the supplier and distributor sides of the business are at a record low.

In the face of a declining business model, the big networks are proposing to put themselves on the same steady footing as specialty channels, which charge carriers per subscriber for their signals. With the fees worth about $70-million a year to each network, the stakes are high.

The CRTC is also looking at establishing limits on how much money the networks can spend on U.S. programming. The view in Ottawa is that this spending is the bigger problem for CTV and Global, rather than the cost of local TV. Together, these potential changes represent one of the biggest overhauls the TV industry has contemplated in decades.

IN HAMILTON, A SIGNAL SAVED

This mansion cost six dollars.

For less than the price of a movie ticket, the new owners got a stately 150-year-old house, complete with creaking floors, warmly-lit foyer, hand-carved doors - and the TV station housed inside.

In the deal five months ago, the most valuable thing to change hands wasn't the real estate; it was CHCH Hamilton, the town's only over-the-air television station.

"We're very grateful for CanWest not knowing what they were selling," says Cal Millar, whose company Channel Zero bought CHCH from CanWest Global Communications Corp. in June. "It was a real hidden gem."

For Hamilton, losing the station would have been "devastating," says Donna Skelly, an anchor who led a campaign to save CHCH. "Many of us have lived here forever; some of us were born here. We just didn't want to see it go black."

With her immaculately hair-sprayed coif and talkative nature, Ms. Skelly is every inch a TV personality - and she worked that cachet to drum up support. City councillors got on board; the staff talked about buying the station; the community held a rally. There were speeches. People made signs. They brought their dogs.

And then a bidder stepped in: nine-year-old Channel Zero, which owns a few specialty channels, including Movieola and Silver Screen Classics, but the CHCH deal marked its first foray into over-the-air stations.

For CanWest, the sale - whose bill came to $12 with CJNT in Montreal included - was part of an effort to jettison money-losing operations. The real price tag of the deal was Channel Zero's agreement to assume an undisclosed amount of debt and ongoing financial losses at the two stations.

But the purchase also gives the company an opportunity to move up in the broadcasting leagues with a daring programming strategy.

Mr. Millar believes the model he has put in place has the potential to change the TV industry: all-news during the day, old movies at night.

Restrictions

All rights reserved. Republication or redistribution of Thomson Reuters content, including by framing or similar means, is prohibited without the prior written consent of Thomson Reuters. Thomson Reuters is not liable for any errors or delays in Thomson Reuters content, or for any actions taken in reliance on such content. ‘Thomson Reuters’ and the Thomson Reuters logo are trademarks of Thomson Reuters and its affiliated companies.